More collaboration between Australian businesses could grow the economy by billions

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As economic conditions change, CFOs need to look at new ways to make a return on their investments.

One way that’s proven successful is through collaboration, according to recent research.

The 2017 American Express Business Collaboration Index spoke to 700 executives across Australia and found mid-sized companies that invested in “collaboration initiatives” made a return 1.4 times their investment.

The research found those returns across both small and mid-market businesses came via increased sales (53%), reduction in costs (20%) or both (26%).

The report notes “when asked about the ROI from an organisation’s most recent collaboration, small businesses averaged a $28,000 increase in sales and a reduction in costs of $44,000 – a total of $72,000. In comparison mid-sized companies averaged a $430,000 increase in sales or a reduction in costs of $319,000.

“Importantly, highly collaborative organisations are also more likely to report revenue growth over the past 12 months and predict greater growth in the year ahead.”

The report estimates the Australian economy could benefit by billions of dollars if more businesses collaborated.

Executives surveyed most commonly said they collaborated through referring customers or work, sharing knowledge, or working together on joint proposals for projects.

However, businesses are more likely to partner with their current clients or suppliers, rather than reaching out to new businesses, according to the Australian Bureau of Statistics.

This trend can have a negative impact on businesses that aren’t open to collaboration, with the research showing 63% of “low/un-collaborative” businesses hadn’t even been approached about new partnership opportunities in the last three years.

The report notes “businesses which are merely surviving are the ones going it alone; trying to innovate and problem solve in isolation.

“Those that are thriving are able to embrace uncertainty and disruption by looking to and working with others to learn, ideate, test, fail and re-build. They are using collaboration as an investment in the future and those that partner early in their company life-cycle are already seeing the dividends.”

Martin Seward, General Manager and Vice President, American Express Global Commercial Payments, previously wrote that as the global economy becomes increasingly unpredictable, CFOs were taking less risks.

“As business leaders, CFOs need to become comfortable navigating change to ensure they respond appropriately to the barrage of economic tremors that will inevitably come their way,” Seward writes.

“Calculated risk-taking is the key to fuelling innovation, fending off competitors and generating long-term growth.”

A recent example of companies achieving growth through collaboration is the new partnership between Qantas and Uber, offering Frequent Flyer members the ability to book a ride to or from the airport through the airline’s Qantas app.

For Qantas, the collaboration allows them to provide an additional customer service, and brings more customers onto their app, and for Uber, it allows them to reach potential new customers that want to book their ride home and not wait in line at a taxi rank.

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